Exhibit
      10.2

     

    AMENDED
      AND RESTATED

    EMPLOYMENT
      AGREEMENT

     

    This
      AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made this
      5th
      day of
      August, 2008, by and between Albany Molecular Research, Inc., a Delaware
      corporation (the “Company”), and Mark T. Frost (the “Executive”).

    


    WHEREAS,
      the Executive is an officer and key employee of the Company; 

    


    WHEREAS,
      the parties hereto desire to assure that the Executive’s knowledge and
      familiarity with the business of the Company will continue to be available
      to
      the Company after the date hereof; and

    


    WHEREAS,
      the Executive and the Company entered into an amended and restated Employment
      Agreement on June 30, 2006, and wish to amend and restate in full such agreement
      to address issues raised by Section 409A of the Internal Revenue Code of 1986,
      as amended (the “Code”).

    


    NOW,
      THEREFORE, in consideration of the mutual promises and covenants herein
      contained, the parties agree as follows:

    


    1. Employment.
      Subject
      to the provisions of Section 6, the Company hereby employs the Executive and
      the
      Executive accepts such employment upon the terms and conditions hereinafter
      set
      forth.

    


    2. Term
      of Employment.
      The
      term of the Executive’s employment pursuant to this Agreement shall commence on
      and as of the date hereof (the “Effective Date”) and shall remain in effect for
      a period of two (2) years from the Effective Date (the “Term”). The Term shall
      be renewed automatically for periods of two (2) years (each a “Renewal Term”)
      commencing at the third anniversary of the Effective Date and on each subsequent
      anniversary thereafter, unless notice that this Agreement will not be extended
      is given by either the Executive or the Company not less than one-hundred (180)
      days prior to the expiration of the Term (as extended by any Renewal Term).
      The
      period during which the Executive serves as an employee of the Company in
      accordance with and subject to the provisions of this Agreement is referred
      to
      in this Agreement as the “Term of Employment.” 

    


    3. Capacity.
      

    


    (a) Duties.
      During
      the Term of Employment, the Executive shall report directly to the Chairman,
      President and Chief Executive Officer and (i) shall serve as
      an
      executive officer of the
      Company with the title Chief
      Financial Officer, subject to election by the Board of Directors of the Company,
      (ii) shall perform such duties and responsibilities as may be reasonably
      determined by the Board of Directors of the Company consistent with the
      Executive’s title and position, duties and responsibilities as an executive
      officer of the Company as of the Effective Date; provided
      that
      such duties and responsibilities shall be within the general area of the
      Executive’s experience and skills, (iii) upon the request of the Board of
      Directors of the Company, shall serve as an officer and/or director of the
      Company and any of its subsidiaries or affiliates (provided
      that the
      Company shall indemnify the Executive for liabilities incurred as such in
      accordance with its current practices to the fullest extent permitted by
      applicable law); and (iv) shall render all services incident to the
      foregoing.

    


    (b) Extent
      of Service.
      The
      Executive agrees to diligently serve the interests of the Company and shall
      devote substantially all of his working time, attention, skill and energies
      to
      the advancement of the interests of the Company and its subsidiaries and
      affiliates and the performance of his duties and responsibilities hereunder;
      provided
      that
      nothing in this Agreement shall be construed as preventing the Executive from
      (i) investing the Executive’s assets in any entity in a manner not prohibited by
      Section 7 and in such form or manner as shall not require any material
      activities on the Executive’s part in connection with the operations or affairs
      of the entities in which such investments are made, or (ii) engaging in
      religious, charitable or other community or non-profit activities that do not
      impair the Executive’s ability to fulfill the Executive’s duties and
      responsibilities under this Agreement.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    4. Compensation.

    


    (a)
       Salary.
      During
      the Term of Employment, the Company shall pay the Executive a salary (the “Base
      Salary”) at an annual rate as shall be determined from time to time by the Board
      of Directors of the Company or the Compensation Committee of the Board of
      Directors consistent with the general policies and practices of the Company
      and
      subject to periodic review in accordance with the policies and practices of
      the
      Company; provided,
      however,
      that in
      no event shall such rate per annum be less than $312,000.00. Such salary shall
      be subject to withholding under applicable law and shall be payable in periodic
      installments in accordance with the Company’s usual practice for its senior
      executives, as in effect from time to time. 

    


    (b)
       Bonus.
      Annually, the Company shall review the performance of the Company and of the
      Executive during the prior year, and the Company may provide the Executive
      with
      additional compensation as a bonus in accordance with any bonus plan then in
      effect from time to time for senior executives of the Company. Any such bonus
      plan shall have such terms as may be established in the sole discretion of
      the
      Board of Directors of the Company or the Compensation Committee of the Board
      of
      Directors. 

    


    5. Benefits.

    


    (a)
       Regular
      Benefits.
      During
      the Term of Employment, the Executive shall be entitled to participate in any
      and all medical, dental, pension and life insurance plans, disability income
      plans and other employee benefit plans as in effect from time to time for senior
      executives of the Company. Such participation shall be subject to (i) the terms
      of the applicable plan documents, (ii) generally applicable policies of the
      Company and (iii) the discretion of the Board of Directors of the Company or
      the
      administrative or other committee provided for in, or contemplated by, such
      plan. Compliance with this Section 5(a) shall in no way create or be deemed
      to
      create any obligation, express or implied, on the part of the Company or any
      subsidiary or affiliate of the Company with respect to the continuation of
      any
      benefit or other plan or arrangement maintained as of or prior to the Effective
      Date or the creation and maintenance of any particular benefit or other plan
      or
      arrangement at any time after the Effective Date. 

    


    (b) Reimbursement
      of Expenses.
      The
      Company shall promptly reimburse the Executive for all reasonable business
      expenses incurred by the Executive during the Term of Employment in accordance
      with the Company’s practices for senior executives of the Company, as in effect
      from time to time.

    


    (c)
       Vacation.
      During
      the Term of Employment, the Executive shall receive at least four (4) weeks
      paid
      vacation annually or such greater amount as is in accordance with the Company’s
      practices for senior executives of the Company, as in effect from time to
      time.

    


    6. Termination
      of Employment.
      Notwithstanding the provisions of Section 2, the Executive’s employment under
      this Agreement shall terminate under the following circumstances set forth
      in
      this Section 6.

    


    For
      purposes of this Agreement, “Date
      of Termination”
means
      (i) if the Executive’s employment is terminated by his death as provided in
      Section 6(c), the date of his death; (ii) if the Executive’s employment is
      terminated due to his permanent disability as provided in Section 6(c), the
      date
      on which notice of termination is given; (iii) if the Executive’s employment is
      terminated under Section 6(e), sixty (60) days after the date on which notice
      of
      termination is given; and (iv) if the Executive’s employment is terminated under
      Section 6(f), the date on which the applicable cure period expires.

    


    (a) Mutual
      Consent.
      The
      Executive’s employment under this Agreement may be terminated at any time by the
      mutual consent of the Executive and the Company on such terms as both parties
      shall mutually agree.

    


    (b) Termination
      by the Company for Cause.
      The
      Executive’s employment under this Agreement may be terminated by the Company for
      Cause at any time upon written notice to the Executive without further liability
      on the part of the Company. For purposes of this Agreement, a termination shall
      be for Cause if:

    


    (i) the
      Executive shall commit an act of fraud, embezzlement, misappropriation or breach
      of fiduciary duty against the Company or any of its subsidiaries or affiliates
      or shall be convicted by a court of competent jurisdiction or shall plead guilty
      or nolo contendere to any felony or any crime involving moral
      turpitude;


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (ii) the
      Executive shall commit a material breach of any of the covenants, terms or
      provisions of Section 7 or 8 hereof which breach has not been cured within
      fifteen (15) days after delivery to the Executive by the Company of written
      notice thereof;

    


    (iii) the
      Executive shall commit a material breach of any of the covenants, terms or
      provisions hereof (other than pursuant to Section 7 or 8 hereof) which breach
      has not been remedied within thirty (30) days after delivery to the Executive
      by
      the Company of written notice thereof; or

    


    (iv) the
      Executive shall have disobeyed reasonable written instructions from the
      Company’s Board of Directors Compensation Committee or other appropriate
      governing committee which are consistent with the terms and conditions of this
      Agreement or shall have deliberately, willfully, substantially and continuously
      failed to perform the Executive’s duties hereunder, after written notice and
      under circumstances effectively constituting a voluntary resignation of the
      Executive’s position with the Company.

    


    Upon
      termination for Cause as provided in this Section 6(b), all obligations of
      the
      Company under this Agreement shall thereupon immediately terminate other than
      any obligations with respect to (A) earned but unpaid Base Salary and (B) the
      continued rights of the Executive to receive payments due under the Technology
      Development Incentive Plan. The Company shall have any and all rights and
      remedies under this Agreement and applicable law.

    


    (c) Death;
      Disability.
      The
      Executive’s employment under this Agreement may be terminated by the Company
      upon the earlier of death or permanent disability (as defined below) of the
      Executive continuing for a period of one hundred eighty (180) days. Upon any
      such termination of the Executive’s employment, all obligations of the Company
      under this Agreement shall thereupon immediately terminate other than any
      obligations with respect to (i) earned but unpaid salary through the Date of
      Termination, (ii) bonus payments with respect to the calendar year within which
      such termination occurred on the basis of and to the extent contemplated in
      any
      bonus plan then in effect with respect to senior executive officers of the
      Company, pro-rated on the basis of the number of days of the Executive’s actual
      employment hereunder during such calendar year through the Date of Termination,
      and (iii) in the case of permanent disability, continuation at the Company’s
      expense of health insurance benefits (medical and dental) until the first
      anniversary of the Date of Termination to the extent permitted under the
      Company’s group health insurance policy. As used herein, the term “permanent
      disability” or “permanently disabled” means the inability of the Executive, by
      reason of injury, illness or other similar cause, after reasonable accommodation
      by the Company, to perform a major part of his duties and responsibilities
      in
      connection with the conduct of the business and affairs of the Company. The
      Company shall provide written notice to the Executive of the termination of
      his
      employment hereunder due to permanent disability. The provisions of the
      Technology Development Incentive Plan shall apply to matters related to any
      technical incentive compensation being received at the time of disability or
      death of the Executive.

    


    (d) Voluntary
      Termination by the Executive.
      At any
      time during the Term of Employment, the Executive may terminate his employment
      under this Agreement upon sixty (60) days’ prior written notice to the Company.
      Upon termination by the Executive as provided in this Section 6(d), all
      obligations of the Company under this Agreement shall thereupon immediately
      terminate other than any obligations with respect to earned but unpaid Base
      Salary and any payments of technology incentive compensation under the
      Technology Development Incentive Plan.

    


    (e) Termination
      by the Company Without Cause.
      The
      Executive’s employment under this Agreement may be terminated by the Company at
      any time without Cause by the Company upon sixty (60) days’ prior written notice
      to the Executive. Any termination by the Company of the Executive’s employment
      under this Agreement which does not constitute a termination for Cause under
      Section 6(b) and is not a termination on account of death or disability under
      Section 6(c) shall be deemed a termination without Cause. Upon any such
      termination of the Executive’s employment, all obligations of the Company under
      this Agreement shall thereupon immediately terminate other than any obligations
      with respect to earned but unpaid Base Salary and bonus under Section 4. In
      addition, subject to the Executive signing a general release of claims in a
      form
      and manner satisfactory to the Company and the lapse of any statutory revocation
      period, the Company shall continue to pay the Executive his Base Salary at
      the
      rate then in effect pursuant to Section 4(a) for a period of one (1) year from
      the Date of Termination and shall pay to the Executive in monthly installments
      over the one (1) year period, an amount equal to the Executive’s cash bonus, if
      any, received in respect of the year immediately preceding the year of
      termination pursuant to Section 4(b) beginning with the first payroll date
      that
      begins thirty (30) days after the Date of Termination. The Company shall also
      pay 100% of the costs to provide up to twelve (12) months of outplacement
      support services at a level appropriate for the Executive’s title and
      responsibility and provide the Executive with health and dental insurance
      continuation at a level consistent with the level and type the Executive had
      in
      place at the time of termination for a period of twelve (12) months from the
      Date of Termination to the extent permitted under the Company’s group health
      insurance policy. Termination of the Executive without Cause shall not impact
      the eligibility of the Executive to receive technology incentive compensation
      payments due under the provisions of the Technology Development Incentive
      Plan.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (f) Termination
      by the Executive upon Company Breach.
      The
      Executive shall have the right to terminate his employment hereunder upon
      written notice to the Company in the event of (i) a material diminution in
      the
      nature or scope of the powers, duties or responsibilities of the Executive
      or
      (ii) a breach by the Company of any of its material obligations hereunder,
      in
      each case after the Executive has given written notice to the Company specifying
      such default by the Company within sixty (60) days of the occurrence of the
      default and giving the Company a reasonable time, not less than thirty (30)
      days, to conform its performance to its obligations hereunder. Upon any such
      termination of the Executive’s employment, all obligations of the Company under
      this Agreement shall thereupon immediately terminate other than any obligations
      with respect to earned but unpaid Base Salary and bonus under Section 4. In
      addition, subject to the Executive signing a general release of claims in a
      form
      and manner satisfactory to the Company and the lapse of any statutory revocation
      period, the Company shall continue to pay the Executive his Base Salary at
      the
      rate then in effect pursuant to Section 4(a) for a period of one (1) year from
      the Date of Termination and shall pay to the Executive in monthly installments
      over the one (1) year period, an amount equal to the Executive’s cash bonus, if
      any, received in respect of the year immediately preceding the year of
      termination pursuant to Section 4(b) beginning with the first payroll date
      that
      begins thirty (30) days after the Date of Termination. The Company shall also
      pay 100% of the costs to provide up to twelve (12) months of outplacement
      support services at a level appropriate for the Executive’s title and
      responsibility and provide the Executive with health and dental insurance
      continuation at a level consistent with the level and type the Executive had
      in
      place at the time of termination for a period of twelve (12) months from the
      Date of Termination to the extent permitted under the Company’s group health
      insurance policy. Termination of the Executive upon Company breach shall not
      impact the eligibility of the Executive to receive technology incentive
      compensation payments due under the provisions of the Technology Development
      Incentive Plan.

    


    (g) Termination
      Pursuant to a Change of Control.
      If
      there is a Change of Control, as defined below, during the Term of Employment,
      the provisions of this Section 6(g) shall apply and shall continue to apply
      throughout the remainder of the Term (as extended by any Renewal Term). Upon
      a
      Change in Control, the Executive will become fully vested in any outstanding
      stock options, Restricted Stock or other stock grants awarded and become fully
      vested in all Company contributions made to the Executive’s 401(k), Profit
      Sharing or other retirement account(s). If, within two (2) years following
      a
      Change of Control, the Executive’s employment is terminated by the Company
      without Cause (in accordance with Section 5(e) above) or by the Executive for
      “Good Reason” (as defined in Section 5(g)(ii) below), in lieu of any severance
      and other benefits payable under Section 5(e) or Section 5(f), subject to the
      Executive signing a general release of claims in a form and manner satisfactory
      to the Company and the lapse of any statutory revocation period, the Company
      shall pay to the Executive (or the Executive’s estate, if applicable) a lump sum
      amount equal to one (1) times the sum of (x) the Executive’s Base Salary at the
      rate then in effect pursuant to Section 4(a), plus
      (y) an
      amount equal to the Executive’s cash bonus, if any, received in respect of the
      year immediately preceding the year of termination pursuant to Section 4(b)
      within thirty (30) days of the Date of Termination. The Company shall also
      pay
      100% of the costs to provide up to twelve (12) months of outplacement support
      services at a level appropriate for the Executive’s title and responsibility and
      provide the Executive with health and dental insurance continuation at a level
      consistent with the level and type the Executive had in place at the time of
      termination for a period of twelve (12) months from the Date of Termination
      to
      the extent permitted under the Company’s group health insurance policy.
      Termination upon a Change of Control shall not impact the eligibility of the
      Executive to receive technology incentive compensation payments due under the
      provisions of the Technology Development Incentive Plan.

    


    (i) “Change
      of Control”
shall
      mean the occurrence of any one of the following events:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (A) any
      “person” as such term is used in Sections 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended (the “Act”) (other than the Company, any of its
      subsidiaries, or any trustee, fiduciary or other person or entity holding
      securities under any employee benefit plan or trust of the Company or any of
      its
      subsidiaries and other than Thomas E. D’Ambra, Ph.D.), together with all
“affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the
      Act) of such person, shall become the “beneficial owner” (as such term is
      defined in Rule 13d-3 under the Act), directly or indirectly, of securities
      of
      the Company representing twenty-five percent (25%) or more of the combined
      voting power of the Company’s then outstanding securities having the right to
      vote in an election of the Company’s Board of Directors (“Voting Securities”)
      (in such case other than as a result of an acquisition of securities directly
      from the Company); 

    


    (B) persons
      who, as of the Effective Date, constitute the Company’s Board of Directors (the
“Incumbent Directors”) cease for any reason, including, without limitation, as a
      result of a tender offer, proxy contest, merger or similar transaction, to
      constitute at least a majority of the Board; provided
      that any
      person becoming a director of the Company subsequent to the Effective Date
      shall
      be considered an Incumbent Director if such person’s election was approved by or
      such person was nominated for election by either (1) a vote of at least a
      majority of the Incumbent Directors or (2) a vote of at least a majority of
      the
      Incumbent Directors who are members of a nominating committee comprised, in
      the
      majority, of Incumbent Directors; but provided further
      that any
      such person whose initial assumption of office is in connection with an actual
      or threatened election contest relating to the election of members of the Board
      of Directors or other actual or threatened solicitation of proxies or consents
      by or on behalf of a person other than the Board, including by reason of
      agreement intended to avoid or settle any such actual or threatened contest
      or
      solicitation, shall not be considered an Incumbent Director; or

    


    (C) consummation
      of (1) any consolidation or merger of the Company where the stockholders of
      the
      Company, immediately prior to the consolidation or merger, would not,
      immediately after the consolidation or merger, beneficially own (as such term
      is
      defined in Rule 13d-3 under the Act), directly or indirectly, shares
      representing in the aggregate more than fifty percent (50%) of the voting shares
      of the corporation issuing cash or securities in the consolidation or merger
      (or
      of its ultimate parent corporation, if any), or (2) any sale, lease, exchange
      or
      other transfer (in one transaction or a series of transactions contemplated
      or
      arranged by any party as a single plan) of all or substantially all of the
      assets of the Company; or

    


    (D) the
      stockholders of the Company shall approve any plan or proposal for the
      liquidation or dissolution of the Company.

    


    Notwithstanding
      the foregoing, a “Change of Control” shall not be deemed to have occurred for
      purposes of the foregoing clause (A) solely as the result of an acquisition
      of
      securities by the Company which, by reducing the number of shares of Voting
      Securities outstanding, increases the proportionate number of shares of Voting
      Securities beneficially owned by any person to twenty-five percent (25%) or
      more
      of the combined voting power of all then outstanding Voting Securities;
provided,
      however,
      that if
      any person referred to in this sentence shall thereafter become the beneficial
      owner of any additional shares of Voting Securities (other than pursuant to
      a
      stock split, stock dividend, or similar transaction or as a result of an
      acquisition of securities directly from the Company), then a “Change of Control”
shall be deemed to have occurred for purposes of the foregoing clause
      (A).

    


    (ii) “Good
      Reason”
shall
      mean the occurrence of any of the following:

    


    (A) 
      a
      material diminution in the nature or scope of the powers, duties or
      responsibilities of the Executive;

    


    (B) a
      breach
      by the Company of any of its material obligations hereunder; or

    


    (C) the
      relocation of the offices at which the Executive is principally employed as
      of
      the Change of Control to a location more than fifty (50) miles from such
      offices, which relocation is not approved by the Executive.

    


    (iii) The
      Executive shall provide the Company with reasonable notice and an opportunity
      to
      cure any of the events listed in Section 6(g)(ii) within sixty (60) days of
      the
      occurrence of the event and shall not be entitled to compensation pursuant
      to
      this Section 6(g) unless the Company fails to cure within a reasonable period
      of
      not less than thirty (30) days.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    (h) Gross
      Up Payment.
      

    


    (i) In
      the
      event it shall be determined that any compensation, payment or distribution
      by
      the Company to or for the benefit of the Executive, whether paid or payable
      or
      distributed or distributable pursuant to the terms of this Agreement or
      otherwise (the “Severance Payments”), would be subject to the excise tax imposed
      by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”),
      or any interest or penalties are incurred by the Executive with respect to
      such
      excise tax (such excise tax, together with any such interest and penalties,
      are
      hereinafter collectively referred to as the “Excise Tax”), then the Executive
      shall be entitled to receive an additional payment (a “Gross-Up Payment”) such
      that the net amount retained by the Executive, after deduction of any Excise
      Tax
      on the Severance Payments, any Federal, state, and local income tax, employment
      tax and Excise Tax upon the payment provided by this subsection, and any
      interest and/or penalties assessed with respect to such Excise Tax, shall be
      equal to the Severance Payments. 

    


    (ii) Subject
      to the provisions of subsection (iii) below, all determinations required to
      be
      made under this subsection (ii), including whether a Gross-Up Payment is
      required and the amount of such Gross-Up Payment, shall be made by a nationally
      recognized accounting firm selected by the Company (the “Accounting Firm”),
      which shall provide detailed supporting calculations both to the Company and
      the
      Executive within fifteen (15) business days of the Date of Termination, if
      applicable, or at such earlier time as is reasonably requested by the Company
      or
      the Executive. For purposes of determining the amount of the Gross-Up Payment,
      the Executive shall be deemed to pay Federal income taxes at the highest
      marginal rate of Federal income taxation applicable to individuals for the
      calendar year in which the Gross-Up Payment is to be made, and state and local
      income taxes at the highest marginal rates of individual taxation in the state
      and locality of Executive’s residence on the date of the Terminating Event, net
      of the maximum reduction in Federal income taxes which could be obtained from
      deduction of such state and local taxes. The initial Gross-Up Payment, if any,
      as determined pursuant to this subsection (ii), shall be paid to the relevant
      tax authorities as withholding taxes on behalf of the Executive at such time
      or
      times when each Excise Tax Payment is due. Any determination by the Accounting
      Firm shall be binding upon the Company and the Executive. As a result of the
      uncertainty in the application of Section 4999 of the Code at the time of the
      initial determination by the Accounting Firm hereunder, it is possible that
      Gross-Up Payments which will not have been made by the Company should have
      been
      made (an “Underpayment”). In the event that the Company exhausts its remedies
      pursuant to subsection (iii) below and the Executive thereafter is required
      to
      make a payment of any Excise Tax, the Accounting Firm shall determine the amount
      of the Underpayment that has occurred, consistent with the calculations required
      to be made hereunder, and any such Underpayment, and any interest and penalties
      imposed on the Underpayment and required to be paid by the Executive in
      connection with the proceedings described in subsection (iii) below, shall
      be
      promptly paid by the Company to the relevant tax authorities as withholding
      taxes on behalf of the Executive.

    


    (iii) The
      Executive shall notify the Company in writing of any claim by the Internal
      Revenue Service that, if successful, would require the payment by the Company
      of
      the Gross-up Payment. Such notification shall be given as soon as practicable
      but no later than ten (10) business days after the Executive knows of such
      claim
      and shall apprise the Company of the nature of such claim and the date on which
      such claim is requested to be paid. The Executive shall not pay such claim
      prior
      to the expiration of the thirty (30)-day period following the date on which
      he
      gives such notice to the Company (or such shorter period ending on the date
      that
      any payment of taxes with respect to such claim is due). If the Company notifies
      the Executive in writing prior to the expiration of such period that it desires
      to contest such claim, provided that the Company has set aside adequate reserves
      to cover the Underpayment and any interest and penalties thereon that may
      accrue, the Executive shall: (A) give the Company any information reasonably
      requested by the Company relating to such claim, (B) take such action in
      connection with contesting such claim as the Company shall reasonably request
      in
      writing from time to time, including, without limitation, accepting legal
      representation with respect to such claim by an attorney selected by the
      Company, (C) cooperate with the Company in good faith in order to effectively
      contest such claim, and (D) permit the Company to participate in any proceedings
      relating to such claim; provided, however, that the Company shall bear and
      pay
      directly all costs and expenses (including additional interest and penalties)
      incurred in connection with such contest and shall indemnify and hold the
      Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
      including interest and penalties with respect thereto, imposed as a result
      of
      such representation and payment of costs and expenses. Without limitation on
      the
      foregoing provisions of this subsection (iii), the Company shall control all
      proceedings taken in connection with such contest and, at its sole option,
      may
      pursue or forego any and all administrative appeals, proceedings, hearings
      and
      conferences with the taxing authority in respect of such claim and may, at
      its
      sole option, either direct the Executive to pay the tax claimed and sue for
      a
      refund or contest the claim in any permissible manner, and the Executive agrees
      to prosecute such contest to a determination before any administrative tribunal,
      in a court of initial jurisdiction and in one or more appellate courts, as
      the
      Company shall determine; provided, however, that if the Company directs the
      Executive to pay such claim and sue for a refund, the Company shall advance
      the
      amount of such payment to the Executive on an interest-free basis (to the extent
      not prohibited by applicable law) and shall indemnify and hold the Executive
      harmless, on an after-tax basis, from any Excise Tax or income tax, including
      interest or penalties with respect thereto, imposed with respect to such advance
      or with respect to any imputed income with respect to such advance; and further
      provided that any extension of the statute of limitations relating to payment
      of
      taxes for the taxable year of the Executive with respect to which such contested
      amount is claimed to be due is limited solely to such contested amount.
      Furthermore, the Company’s control of the contest shall be limited to issues
      with respect to which a Gross-Up Payment would be payable hereunder and the
      Executive shall be entitled to settle or contest, as the case may be, any other
      issues raised by the Internal Revenue Service or any other taxing
      authority.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (iv) If,
      after
      a Gross-Up Payment by the Company on behalf of the Executive pursuant to this
      Section 6(h), the Executive becomes entitled to receive any refund with respect
      to such claim, the Executive shall (subject to the Company’s complying with the
      requirements of subsection (iii) above) promptly pay to the Company the amount
      of such refund (together with any interest paid or credited thereon after taxes
      applicable thereto). If, after a Gross-Up Payment by the Company pursuant to
      this Section 5(h), a determination is made that the Executive shall not be
      entitled to any refund with respect to such claim and the Company does not
      notify the Executive in writing of its intent to contest such denial of refund
      prior to the expiration of thirty (30) days after such determination, then
      such
      advance shall be forgiven and shall not be required to be repaid and the amount
      of such advance shall offset, to the extent thereof, the amount of Gross-Up
      Payment required to be paid.

    


    (i) No
      Mitigation.
      Without
      regard to the reason for the termination of the Executive’s employment
      hereunder, the Executive shall be under no obligation to mitigate damages with
      respect to such termination under any circumstances and in the event the
      Executive is employed or receives income from any other source, there shall
      be
      no offset against the amounts due from the Company hereunder.

    


    (j) Section
      409A.

    


    (i) Anything
      in this Agreement to the contrary notwithstanding, if at the time of the
      Executive’s separation from service within the meaning of Section 409A of the
      Code, the Company determines that the Executive is a “specified employee” within
      the meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any
      payment or benefit that the Executive becomes entitled to under this Agreement
      would be considered deferred compensation subject to the 20 percent additional
      tax imposed pursuant to Section 409A(a) of the Code as a result of the
      application of Section 409A(a)(2)(B)(i) of the Code, such payment shall not
      be
      payable and such benefit shall not be provided until the date that is the
      earlier of (A) six months and one day after the Executive’s separation from
      service, or (B) the Executive’s death. If any such delayed cash payment is
      otherwise payable on an installment basis, the first payment shall include
      a
      catch-up payment covering amounts that would otherwise have been paid during
      the
      six-month period but for the application of this provision, and the balance
      of
      the installments shall be payable in accordance with their original schedule.
      Any such delayed cash payment shall earn interest at an annual rate equal to
      the
      prime rate reported by The
      Wall Street Journal
      as of
      the date of separation from service, from such date of separation from service
      until the payment.

    


    (ii) The
      parties intend that this Agreement will be administered in accordance with
      Section 409A of the Code. To the extent that any provision of this Agreement
      is
      ambiguous as to its compliance with Section 409A of the Code, the provision
      shall be read in such a manner so that all payments hereunder comply with
      Section 409A of the Code. The parties agree that this Agreement may be amended,
      as reasonably requested by either party, and as may be necessary to fully comply
      with Section 409A of the Code and all related rules and regulations in order
      to
      preserve the payments and benefits provided hereunder without additional cost
      to
      either party.

    


    (iii) The
      determination of whether and when a separation from service has occurred shall
      be made in accordance with the presumptions set forth in Treasury Regulation
      Section 1.409A-1(h).

    


    (iv) The
      Company makes no representation or warranty and shall have no liability to
      the
      Executive or any other person if any provisions of this Agreement are determined
      to constitute deferred compensation subject to Section 409A of the Code but
      do
      not satisfy an exemption from, or the conditions of, such
      Section.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    7. Non-Competition
      and No Solicitation.

    


    (a) Because
      the Executive’s services to the Company are special and because the Executive
      has access to the Company’s confidential information, during the Term of
      Employment and for a period of twelve (12) months following the termination,
      the
      Executive shall not, without the express written consent of the Company,
      directly or indirectly, engage, participate, invest in, be employed by or
      assist, whether as owner, part-owner, shareholder, partner, director, officer,
      trustee, employee, agent or consultant, or in any other capacity, any Person
      (as
      hereinafter defined) other than the Company and its affiliates in the Designated
      Industry (as hereinafter defined); provided, however, that nothing herein shall
      be construed as preventing the Executive from making passive investments in
      a
      Person in the Designated Industry if the securities of such Person are publicly
      traded and such investment constitutes less than one percent (1%) of the
      outstanding shares of capital stock or comparable equity interests of such
      Person. 

    


    (b) For
      purposes of this Agreement, the following terms have the following
      meanings:

    “Person”
means
      an individual, a corporation, an association, a partnership, a limited liability
      company, an estate, a trust and any other entity or organization; and


    


    “Designated
      Industry”
means
      the business of providing chemistry research and development services to
      pharmaceutical and biotechnology companies involved in drug development and
      discovery and any and all activities related thereto, including, without
      limitation, medicinal chemistry, chemical development, biocatalysis, analytical
      chemistry services and small-scale manufacturing and any other business
      conducted by the Company during the Executive’s employment with the
      Company.

    


    (c) For
      a
      period of twelve (12) months following the termination of this Agreement for
      any
      reason, the Executive shall not, directly or indirectly, alone or as a member
      of
      any partnership or limited liability company or entity, or as an officer,
      director, shareholder, or employee of any corporation or entity (a) solicit
      or
      otherwise encourage any employee or independent contractor of the Company to
      terminate his/her relationship with the Company, or (b) recruit, hire or solicit
      for employment or for engagement as an independent contractor, any person who
      is
      or was employed by the Company at any time during the Executive’s employment
      with the Company. This paragraph shall not apply to persons whose employment
      and/or retention with the Company has been terminated for a period of twelve
      (12) months or longer.

    


    8. Confidentiality.
      In the
      course of performing services hereunder and otherwise, the Executive has had,
      and it is anticipated that the Executive will from time to time have, access
      to
      confidential records, data, customer lists, trade secrets, technology and
      similar confidential information owned or used in the course of business by
      the
      Company and its subsidiaries and affiliates (the “Confidential Information”).
      The Executive agrees (i) to hold the Confidential Information in strict
      confidence, (ii) not to disclose the Confidential Information to any Person
      (other than in the regular business of the Company), and (iii) not to use,
      directly or indirectly, any of the Confidential Information for any competitive
      or commercial purpose; provided, however, that the limitations set forth above
      shall not apply to any Confidential Information which (A) is then generally
      known to the public, (B) became or becomes generally known to the public through
      no fault of the Executive, or (C) is disclosed in accordance with an order
      of a
      court of competent jurisdiction or applicable law. Upon termination of the
      Executive’s employment with the Company, all data, memoranda, customer lists,
      notes, programs and other papers and items, and reproductions thereof relating
      to the foregoing matters in the Executive’s possession or control, shall be
      returned to the Company and remain in its possession. This Section 8 shall
      survive the termination of this Agreement for any reason.

    


    9. Conflicting
      Agreements.
      The
      Executive hereby represents and warrants that the execution of this Agreement
      and the performance of his obligations hereunder will not breach or be in
      conflict with any other agreement to which he is a party or is bound, and that
      he is not now subject to any covenants which would affect the performance of
      his
      obligations hereunder. As of the Effective Date, the Executive is not performing
      any other duties for, and is not a party to any similar agreement with, any
      Person competing with the Company or any of its affiliates.

    


    10. Severability.
      In case
      any of the provisions contained in this Agreement shall for any reason be held
      to be invalid, illegal or unenforceable in any respect, any such invalidity,
      illegality or unenforceability shall not affect any other provision of this
      Agreement, but this Agreement shall be construed as if such invalid, illegal
      or
      unenforceable provision had been limited or modified (consistent with its
      general intent) to the extent necessary to make it valid, legal and enforceable,
      or if it shall not be possible to so limit or modify such invalid, illegal
      or
      unenforceable provision or part of a provision, this Agreement shall be
      construed as if such invalid, illegal or unenforceable provision or part of
      a
      provision had never been contained in this Agreement.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    11. Litigation
      and Regulatory Cooperation.
      During
      and after the Executive’s employment, the Executive shall cooperate fully with
      the Company in the defense or prosecution of any claims or actions now in
      existence or which may be brought in the future against or on behalf of the
      Company which relate to events or occurrences that transpired while the
      Executive was employed by the Company. The Executive’s full cooperation in
      connection with such claims or actions shall include, but not be limited to,
      being available to meet with counsel to prepare for discovery or trial and
      to
      act as a witness on behalf of the Company at mutually convenient times. During
      and after the Executive’s employment, the Executive also shall cooperate fully
      with the Company in connection with any investigation or review of any federal,
      state or local regulatory authority as any such investigation or review relates
      to events or occurrences that transpired while the Executive was employed by
      the
      Company. The Company shall reimburse the Executive for any reasonable
      out-of-pocket expenses incurred in connection with the Executive’s performance
      of obligations pursuant to this Section 11. This Section 11 shall survive the
      termination of this Agreement for any reason.

    


    12. Arbitration
      of Disputes.
      Any
      dispute or controversy arising under or in connection with this Agreement shall
      be settled exclusively by arbitration in Albany, New York, in accordance with
      the rules of the American Arbitration Association then in effect. Judgment
      may
      be entered in any court having jurisdiction. In the event that the Company
      terminates the Executive’s employment for cause under Section 6(b) and the
      Executive contends that cause did not exist, then the Company’s only obligation
      shall be to submit such claim to arbitration and the only issue before the
      arbitrator will be whether the Executive was in fact terminated for cause.
      If
      the arbitrator determines that the Executive was not terminated for cause by
      the
      Company, then the only remedies that the arbitrator may award are (i) payment
      of
      amounts which would have been payable if the Executive’s employment had been
      terminated under Section 6(e), (ii) the costs of arbitration, (iii) the
      Executive’s attorneys’ fees, and (iv) all rights and benefits granted or in
      effect with respect to the Executive under the Company’s stock option plans and
      agreements with the Executive pursuant thereto, with the vesting and exercise
      of
      any stock options and the forfeit ability of any stock-based grants held by
      the
      Executive to be governed by the terms of such plans and the related agreements
      between the Executive and the Company. If the arbitrator finds that the
      Executive’s employment was terminated for cause, the arbitrator will be without
      authority to award the Executive anything, and the parties will each be
      responsible for their own attorneys’ fees, and they will divide the costs of
      arbitration equally. Furthermore, should a dispute occur concerning the
      Executive’s mental or physical capacity as described in Section 6(c), a doctor
      selected by the Executive and a doctor selected by the Company shall be entitled
      to examine the Executive. If the opinion of the Company’s doctor and the
      Executive’s doctor conflict, the Company’s doctor and the Executive’s doctor
      shall together agree upon a third doctor, whose opinion shall be binding. This
      Section 12 shall survive the termination of this Agreement for any
      reason.

    


    13. Specific
      Performance.
      Notwithstanding Section 12 hereof, it is specifically understood and agreed
      that
      any breach of the provisions of this Agreement, including, without limitation,
      Sections 7 and 8 hereof, by the Executive is likely to result in irreparable
      injury to the Company and its subsidiaries and affiliates, that the remedy
      at
      law alone will be inadequate remedy for such breach and that, in addition to
      any
      other remedy it may have, the Company shall be entitled to enforce the specific
      performance of this Agreement by the Executive and to seek both temporary and
      permanent injunctive relief (to the extent permitted by law), without the
      necessity of proving actual damages. To the extent that any court action is
      permitted consistent with or to enforce Section 7 or 8 of this Agreement, the
      parties hereby agree to the sole and exclusive jurisdiction of the Supreme
      Court
      of the State of New York (Albany County) and the United States District Court
      for the Northern District of New York (City of Albany). Accordingly, with
      respect to any such court action, the Executive (i) submits to the personal
      jurisdiction of such courts, (ii) consents to service of process, and (iii)
      waives any other requirement (whether imposed by statute, rule of court or
      otherwise) with respect to personal jurisdiction or service of
      process.

    


    14. Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing and shall be deemed to have been duly given (i) when delivered by hand,
      (ii) when transmitted by facsimile and receipt is acknowledged, or (iii) if
      mailed by certified or registered mail with postage prepaid, on the third
      business day after the date on which it is so mailed:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    To
      the
      Company:

    


    Albany
      Molecular Research, Inc.

    21
      Corporate Circle

    Albany,
      New York 12203-5154

    Facsimile:
      (518) 867-4375

    Attention:
      Board of Directors

    


    To
      the
      Executive, at the address on file with the Company 

    


    or
      to
      such other address of which any party may notify the other parties as provided
      above. Notices shall be effective as of the date of such delivery or
      mailing.

    


    15. Amendment;
      Waiver.
      This
      Agreement shall not be amended, modified or discharged in whole or in part
      except by an Agreement in writing signed by both of the parties hereto. The
      failure of either of the parties to require the performance of a term or
      obligation or to exercise any right under this Agreement or the waiver of any
      breach hereunder shall not prevent subsequent enforcement of such term or
      obligation or exercise of such right or the enforcement at any time of any
      other
      right hereunder or be deemed a waiver of any subsequent breach of the provision
      so breached, or of any other breach hereunder.

    


    16. Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of successors of the Company by way of
      merger, consolidation or transfer of all or substantially all of the assets
      of
      the Company, and may not be assigned by the Executive. The
      Company shall require any successor (whether direct or indirect, by purchase,
      merger, consolidation or otherwise) to all or substantially all of the business
      or assets of the Company expressly to assume and agree to perform this Agreement
      to the same extent that the Company would be required to perform it if no
      succession had taken place. Failure of the Company to obtain an assumption
      of
      this Agreement at or prior to the effectiveness of any succession shall be
      a
      material breach of this Agreement.

    


    17. Entire
      Agreement.
      This
      Agreement constitutes the entire agreement between the parties concerning the
      subjects hereof and supersedes all prior understandings and agreements between
      the parties relating to the subject matter hereof.  

    


    18. Governing
      Law.
      This
      Agreement shall be construed and regulated in all respects under the laws of
      the
      State of New York.

    


    19. Counterparts.
      This
      Agreement may be executed in counterparts, each of which when so executed and
      delivered shall be taken to be an original, but such counterparts shall together
      constitute one and the same document.

    


    


    [Remainder
      of Page Intentionally Left Blank]


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the day and
      year
      first above written.

    

      
        	 	ALBANY
                MOLECULAR RESEARCH, INC.
	 	 	 
	 	By:	
                 /s/
                  Thomas D’Ambra

              
	 	 	 
	 	EXECUTIVE:
	 	 	 
	 	/s/
                Mark T. Frost
	 	Mark
                T. Frost